Support to Local Economic Development


  • Reference: P-MW-IE0-002
  • Approval date: 24/09/2008
  • Start date: 13/01/2010
  • Appraisal Date: 30/06/2008
  • Status: OngoingOnGo
  • Location: FOUR DISTRICTS


The project will have four components, namely Deepening Enterprise Development (Component I); Growth Centres Development (Component II); Local Authorities Capacity Enhancement (Component III); and Technical Support and Knowledge Management (Component IV).

Component I: Deepening Enterprise Development

This component will establish a nation-wide Matching Grant Facility to support innovative economic development initiatives geared towards

(i) promoting the formation of local business organizations or economic clusters of enterprises and value chains;

(ii) mobilizing community assets and putting them into productive use;

(iii) creating jobs through enterprise development; and

(iv) promoting economic development partnerships and alliances between government, business and communities.

Component II: Growth Centres Development

This component will be geared towards stimulating pro-poor economic growth in the selected growth centres. To this effect, the component will have two sub-components:

(i) Technical Studies; and

(ii) Productive Investments.

Component III: Local Authorities Capacity Enhancement

The strengthening of local institutions is a critical part of the project. It essentially refers to the promotion of good governance and strengthening dialogue among local economic actors involving local government agencies, civil society, the private sector and other economic organizations within the district.

Component IV: Program Support and Knowledge Management

This component will support the following activities geared towards enhancing the operationalisation of the LDF mechanism, implementation of the project and knowledge management to facilitate organizational learning and knowledge sharing


The objective of the project is to improve the socio-economic well being of the local population and strengthen economic growth in selected growth centres. Specifically, the project will seek to:

(i) contribute to poverty reduction by fostering enterprise development through public-private initiatives;

(ii) support productive investments to stimulate pro-poor economic growth in four selected growth centres; and

(iii) contribute towards the creation of an enabling environment for local economic development through targeted capacity building interventions at the national and district levels.


Poor local economic growth and development have primarily been attributed to the pervasive poverty and chronic food insecurity in Malawi. These, in turn, have largely been exacerbated by:

(i) poor economic infrastructure,

(ii) low agricultural productivity- from lack of skills, technology and reliance on rain-fed food crops production etc,

(iii) weak marketing systems and market linkages

(iv) low incomes, resulting from limited value addition in farm-based agric produce,

(v) limited off-farm employment opportunities,

(vi) weak enterprise culture, (vii) weak business development services, and (vii) weak capacities of local governments to provide an enabling environment for private sector-led growth, among many other factors. In light of these, an integrated intervention on local economic development premised on the following assumptions is essential:

(i) an integrated multi-sectoral approach to rural development is needed (such as rejuvenating MSEs as engines of sustained economic growth and promoting rural-urban linkages and market access in a pro-poor manner); and

(ii) a large portion of the rural households is food insecured and therefore access to food is critically dependent on the level of household income and the dynamics of the food market. To this effect, the proposed project will seek to engender pro-poor economic growth and tackle livelihood insecurities (especially food insecurity), through the improvement of the local productive activities, the facilitation of the diversification of the household economic activities and the creation of jobs and incomes.


The project will diversify the economic base, promote value-addition, build backward and forward linkages, ensure that the basic economic infrastructure required for growth of the three local economies are provided. The project will also maximize job creation through the expansion of the micro, small and medium enterprises sector. Viable local economies will reduce rural - urban migration and open markets for rural products. The project will further generate a number of benefits arising from the implementation initiatives arising from value chain analysis on selected commodities. This will increase productivity and consequently address the chronic food security problems in the country.

Key contacts

BANDA Kelvin Kanswala - OSHD1


Finance source Amount
ADFUAC 14,000,000
GovernmentUAC 1,620,000
Co-financierUAC 3,040,000
TotalUAC 18,660,000